What a relief! The 2021 National Insurance Contributors Bill

Justine Riccomini explains what is contained in the 2021 National Insurance Contributions Bill.

The NICs Bill was introduced to Parliament on 12 May 2021. The bill contains four important sections, as follows:

Freeports

The NICs Bill introduces a relief from employer NICs in respect of new employments of eligible employees who work at Freeports in Great Britain and Northern Ireland. The new employment must commence between 6 April 2022 or the date upon which a site receives a Freeport designation, if later, and 6 April 2026. Any new employments commencing after 2022 will receive at least 36 months of relief (assuming the employment is not terminated before this).

The exemption will last a maximum of 4 years - until April 2026, and possibly even longer - 9 years – until April 2031, subject to a review in 2026 of the effectiveness of the measure. A zero-rate employer’s NICs band will be introduced on these earnings up to an Upper Secondary Threshold for the first 36 months in Great Britain.

To qualify, the employer must have physical premises within the boundary of the Freeport. A qualifying employee must spend at least 60% of their time working at that particular Freeport premises.

Note that the definition of a GB-based freeport has been provided for in FB 2021.  An NI Freeport definition will be provided later in a subsequent Finance Bill. Further information about Freeports is available here.

NICs relief for employers of veterans

Although this employer’s NICs relief has been available from 6 April 2021, it is not yet on a statutory footing – the NICs Bill 2021 will remedy this. The draft legislation can be found here. The relief will apply for 12 months in respect of any employer who employs a veteran of the armed forces in their first civilian employment since discharge from the regular armed forces. The veteran must have completed at least one day of basic training in the armed forces employment to qualify.

The measure is available from 6 April 2021 to 5 April 2024, although it will be reviewed in 2023 – and the government may decide to extend it depending on the success of the measure. Further information is available here.

NICs relief for self-employed individuals in receipt of Covid Test and Trace self-isolation support payments

Those self-employed persons who receive coronavirus test and trace support payments will receive Classes 2 and 4 NICs relief on them, bringing the self-employed in line with the employed on this issue. The payments of £500 being made across the UK, which fall under the devolved remit, are administered by local authorities. They are being made to qualifying individuals who are unable to work from home and thus suffer financial detriment as a result of not being able to earn a living, due to having been asked to self-isolate. Class 4 NICs is otherwise payable on profits chargeable to income tax under Chapter 2, Part 2 ITTOIA 2005 by way of s.15, Social Security Contributions and Benefits Act 1992, and Class 2 NICs are payable on any profits chargeable to Class 4 NICs.

Employed earners

The NICs relief (both primary and secondary) was extended to employers (and employees) by way of SIs 2020/1065 and 2020/1532. Claims can be made by employers from April 2022, with retrospective claims for 2021/22 through the Real Time Information system in line with transitional provisions.

NICs avoidance powers widened

The Bill introduces new proposals to widen the existing powers for tackling promoters/enablers of NICs avoidance schemes. These powers mirror the DOTAS provisions in FB 2021, as enabled by section 132A of Social Security Administration Act 1992 which allows the DOTAS legislation to be replicated for NICs.